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DEVELOPMENT DIGEST

Sep 01, 2001

New developments

Wichita, Kan. — Kansas City, Mo.-based R.H. Johnson Co. is developing One Kellogg Place on a 71-acre site on the city's east side. The power center will be anchored by a 200,000-sq.-ft. Wal-Mart Supercenter and a 135,000-sq.-ft. Lowe's. Scheduled for completion in spring 2002, One Kellogg Place will feature additional retail and restaurant venues on its remaining 28 acres.

New York — Holliday Fenoglio Fowler LP recently arranged $9.5 million in financing for Park Ridge Town Square, an 80,000-sq.-ft. community center located in a traffic-heavy spot on Route 111 often referred to as “the gateway to the Hamptons.” The project, a development of Ronkonkoma, N.Y.-based The Park Ridge Organization, will be anchored by a King Kullen Supermarket.

Roswell, Ga. — Phase I of MetroGroup Development's 90,000-sq.-ft. Ellard Village will be completed this month. Tenants such as CVS, Starbucks and Bruster's Ice Cream will occupy the center, which is located within an upscale residential community. A hair salon, dry cleaner and several dining concepts will also be included in the 43,000-sq.-ft. initial phase. The office-dominated, 45,000-sq.-ft. second phase is scheduled to begin this fall. Phillips Partnership PC serves as architect.

Littleton, Colo. — Aspen Grove, a 280,000-sq.-ft. lifestyle center, is under development by Beachwood, Ohio-based Developers Diversified Realty. Located in an upscale Denver neighborhood with a trade area consisting of 250,000 consumers, Aspen Grove will be tenanted by Talbots, AnnTaylor, J.Crew, Pottery Barn, Williams-Sonoma and Gap concepts. Completion of the center is scheduled for later this year.

Royal Oak, Mich. — Chicago-based HSA Commercial is acting as developer and leasing agent for Main Place at Royal Oak, a mixed-use center in the upscale northern suburbs of Detroit. Phase I, a two-level building containing 46,796 sq. ft. of retail space anchored by a 30,000-sq.-ft. Barnes & Noble and two restaurants, will be completed this fall. Phase II will bring additional retail space, as well as residential and parking uses to the center.

Redevelopments

Wilmington, N.C. — The $55 million renovation and remerchandising of 22-year-old Westfield Shoppingtown Independence recently reached completion. Owned by Los Angeles-based Westfield America, the center now incorporates a new, 160,000-sq.-ft. Dillard's plus 164,000 sq. ft. of new specialty shops. After the extensive renovations, the center features new flooring, skylights, entrances, soft seating, themed food courts, a kids' play area, and a total 1.1 million sq. ft. of GLA. Entering the North Carolina market for the first time, Aeropostale, Charlotte Russe, The Buckle, AnnTaylor Loft and Hot Topic are part of the center's revamped tenant lineup.

Minneapolis — Chicago-based McCaffery Interests is redeveloping Block E, a downtown site that will serve as a strategic connector between the city's warehouse, financial and entertainment districts when it is completed in 2002. Anchored by a 27,000-sq.-ft. GameWorks, a 25,000-sq.-ft. Borders Books & Music and a 15-screen, 82,000-sq.-ft. Crown Theatres cinema, Block E will also house a 250-room Marriott Renaissance Hotel. The project will be connected via skyway to the 20,000-seat Target Center stadium and the City Center mixed-use development.

Prescott, Az. — A partnership between Phoenix-based Timmus Corp. and Bonanza LLC hopes to shake 140,000-sq.-ft. Ponderosa Plaza Mall out of its recent sales slump. Poor visibility and poor ingress and egress are obstacles to success cited by the 25-year-old center's anchors, Sears and JCPenney.

Redevelopment plans include renovations of the mall's exterior and interior, including the addition of more parking spaces, better signage and improved access to and from the property. The center, which has 45,000 sq. ft. of empty anchor space, will celebrate its grand re-opening in 2002.

Austin, Texas — Austin Triangle, a 22-acre, residential-driven mixed-use development on state-owned land, will begin construction in early 2002. The project, master-planned by the Dallas office of architectural firm RTKL, will feature 150,000 sq. ft. of retail, 800,000 sq. ft. of apartments and 69,000 sq. ft. of office space. The public/private endeavor includes $7.6 million in incentives approved by the City of Austin for purchase of parkland and infrastructure improvements.

Atlanta-based Post Properties is developing the residential component and Dallas-based Cencor Urban Realty, part of the Weitzman Group, is handling the commercial side. Complete buildout is anticipated in 2008.

Chester, Pa. — With assistance from The Chester Housing Authority, the U.S. Department of Housing and Urban Development and the Commonwealth of Pennsylvania, Kramont Realty Trust will develop and operate a 150,000-sq.-ft. neighborhood center called The Shops at Wellington Ridge.

The center will be one component of a larger, mixed-use, inner-city site being redeveloped. The Plymouth Meeting, Pa.-based developer will select the lenders and building contractor for the project, subject to Housing Authority approval; supervise construction; lease the available space and operate the facility. Kramont has an option to buy the land at a future date.

Kenner, La. — A two-phase, $6.5 million renovation is underway at The Esplanade. Owned by Toronto-based Cadillac Fairview Corp., the 909,973-sq.-ft. center will be updated with new flooring, lighting, restrooms, and soft seating as part of Phase I. To be completed next month, Phase I will also include the addition of two new banks of escalators. Phase II, scheduled for a 2002 completion, will see the redesign and construction of new mall entrances and the remodeling of more than 44,000 sq. ft. of store space. Chicago-based General Growth Properties serves as manager for the 16-year-old center.

Portland, Ore. — MBK Northwest Ltd., a division of Irvine, Calif.-based MBK Real Estate Ltd., has formed a partnership with the City of Lakewood, Ore., to redevelop Lakewood Mall into Lakewood Towne Center. The project will involve converting the existing underperforming, enclosed mall into a 100-acre mixed-use/entertainment center with four distinct components.

First, the site will be home to a new civic center and city hall. Second, MBK will develop a 300,000-sq.-ft. neighborhood center to be anchored by a 62,800-sq.-ft. Safeway. The project's third facet will be a 300,000-sq.-ft. destination shopping center featuring Old Navy, Michael's, G.I. Joe's, Bed Bath & Beyond and Ross Dress For Less. A 90,000-sq.-ft. dining and entertainment component will build on the success of the center's existing, 12-screen Cineplex Odeon.

Demolition of the old mall begins next month, and the new town center's grand opening is slated for July 2002.

New York — Rothwood Real Estate Services of Hialeah, Fla., recently engineered the transformation of a nine-acre, locally-owned Staten Island strip center into a 120,000-sq.-ft. Home Depot. Rothwood, which specializes in big-box conversions, developed the site and sold it to the home improvement retailer.

Major tenant happenings

Farmington, N.M. — A 129,000-sq.-ft. Home Depot is the newest tenant at Chicago-based First National Development Ltd.'s Plaza Farmington, a 330,000-sq.-ft. regional center. By this fall, the center will also be home to a new, 59,000-sq.-ft. Safeway, a Safeway Fuel Center, a 28,000-sq.-ft. TJ Maxx and a 7,000-sq.-ft. Fashion Bug. Los Angeles-based CB Richard Ellis serves as leasing consultant for the project.

Chattanooga, Tenn. — CBL & Associates recently signed deals with three national department stores to anchor three of its regional malls in Tennessee, North Carolina and Texas. A 73,000-sq.-ft. Belk will open in the former Wal-Mart location at College Square Mall in Morristown, Tenn., in spring 2002. A 62,000-sq.-ft. Dillard's will replace the dark Roses Department Store at Randolph Mall in Asheboro, N.C., in fall 2002. And a 164,271-sq.-ft. Foley's will open in Beaumont, Texas' Parkdale Mall in 2002, replacing a closed Montgomery Ward anchor.

Sioux Falls, S.D. — Discount apparel and homegoods retailer Gordmans is celebrating the recent opening of a 60,000-sq.-ft. outparcel location at The Empire in Soux Falls, a 1.31-million-sq.-ft. regional mall. During its first week of business, the store became the top-volume location in Gordman's 38-unit chain. The Empire in Sioux Falls is managed by Santa Monica, Calif.-based The Macerich Co. and is owned by a joint venture between Macerich and Indianapolis-based Simon Property Group.

Commack, N.Y. — Repositioning efforts at the 240,000-sq.-ft. Mayfair Shopping Center have successfully attracted AnnTaylor Loft, Gap and GapKids to the center. Managed by North Plainfield, N.J.-based Levin Management Corp., the center features up to 50,000 sq. ft. of new lease opportunities for anchor tenants.

Atlanta — Vans Skatepark will open a $3 million, 30,000-sq.-ft. venue and retail store at Mall of Georgia. The skateboard park, the third of its kind in the Atlanta metro area, will open this month. Mall of Georgia is a development of Indianapolis-based Simon Property Group and Atlanta-based Ben Carter Properties.

SIDEBAR: Pro forma doubletalk

Retailers, developers and other corporations are finding that pro forma statements make good public relations. Each quarter, the news media is inundated with reports, many with headlines such as “Company X reports pro forma net income of $160 million.” However, if you read the fine print in these releases, you'll often find another figure stating that according to “generally accepted accounting principles,” Company X actually lost $1.3 billion.

By trumpeting misleading pro forma projections, many companies emphasize the positives of their financial performance while disregarding the negatives. In fact, the U.S. Securities and Exchange Commission (SEC) is currently investigating several companies for possible use of deception via pro forma results. The penalty for those companies found guilty includes SEC fines and censures.

What began as a way for companies and analysts to downplay atypical events stands accused of being a method to mislead the public about the true state of a company's bottom line. According to a recent report by Merrill Lynch, earnings among today's top high-tech companies would be 25% lower if companies included nonoperating items and one-time charges, items typically excluded from pro forma projections.

Is a solution at hand? Possibly. Analysts say it would be difficult for the SEC to actually prosecute companies for abusing pro forma figures. But Amazon.com recently switched to reporting both pro forma and GAAP(generally accepted accounting practices) in its news releases after being singled out for its use of inflated pro forma.